Bitcoin Blog a1

Sunday, April 16, 2017

SegWit vs Bitcoin Unlimited: Building a better Bitcoin

This is the second post in my guest post series by Justin, make sure to comment your thoughts!

The 21st century has seen an explosion in the
Internet commerce, business, and overall activity. Every day there are dozens
of new businesses, hundreds of new websites, and millions of emails sent back
and forth between those people who make the Internet run. It only stands to reason
that new currencies would evolve to match these advances in business in
communication. The strongest, and most well-known of these “cryptocurrencies”
is known as Bitcoin. The Bitcoin was a pioneer in the world of cryptocurrencies.
It has gotten the most press, but is also experienced massive fluctuations in
value. Recently, Bitcoin has released to possible adaptations to the base
model: Segwit and Bitcoin Unlimited. These two modifications to the core
programming allow greater security, and usability. However there are certain
differences in the way the program works.

In order to fully understand why Bitcoin needed to be
updated, you need to better understand how cryptocurrencies work. Because there
are no physical resources, such as gold, silver, or other precious metals, back
in the value of the currency it is essential to track how the currency has been
used in order to verify its legitimacy. Every Bitcoin has a certain amount of
data attached to it, this includes past exchanges, who owned it when, and other
information. Each of these pieces of information are necessary in the
transmission of a Bitcoin from one party to another. However, with each
transaction this information becomes bulkier, and harder to transmit. This is
what both Segwit and Bitcoin Unlimited are attempting to solve.

Segwit, or Segregated Witness is among the newest adaptation
to the Bitcoin code. Segwit separates the signature data from the main data
block. Segwit takes that information from the main block and puts it into an
extended block. This type of program change is known as a soft fork. It is
still useable with the pre-changeover data blocks. The Segwit keys start with a
3, instead of the traditional 1. This new version addresses issues of scalability,
and allows more transactions to happen every second. The major advantage of
Segwit is that not everyone needs to use it in order for it to work. Bitcoin
Unlimited is another story.

Bitcoin Unlimited is a system upgrade, and won’t cause
current users to lose their coins. However, it does represent a radical change
in the programing language of the Bitcoin community. Because the nodes are not
backward compatible, Bitcoin unlimited and Bitcoin core are both competing for
dominance in the cryptocurrency market. At the beginning of March, 2017, Bitcoin
unlimited only controlled about 25% of Bitcoin miners, leaving 75% still using Bitcoin
core. The major advantage to Bitcoin unlimited is that it removes the 1mb cap
on main blocks. Along with other upgrades, Bitcoin Unlimited promises more
transactions and more security.

The Internet has become the global market that our ancestors
can only dream of. Unlike traditional currency still hold value, ideas like Bitcoin,
and its sister currencies, seem to have hit their stride in the early 21st
century. With new technology comes new challenges. The success of the coin can
hardly be called negative thing, but it has it’s own hurdles to cross. SegWit,
being a soft fork, attempts to answer security problems without radically
changing the established format. Bitcoin Unlimited, is a hard fork, It
definitely has potential for new uses, and new products. Only time will tell if
the community chooses to be secure the market share is already has, with
Segwit, or take the drastic new-path with Bitcoin unlimited. The future holds
great possibilities for this ground-breaking idea, and pioneering currency.